You are on page 1of 23

Emigration and the Family Economy: Bangladeshi Labor Migration to Saudi Arabia

Md Mizanur Rahman*
National University of Singapore

The new economics of labor migration explains migration as part of family strategies to address income risks and capital constraints in developing countries. However, it does not adequately take into account the risks and costs borne by migrant families in contemporary labor migration. This paper examines the emigration-family economy nexus highlighting the undercurrent of risks in the labor migration process. This study draws from the experiences of Bangladeshi families who have family members working in Saudi Arabia. The research reports that migrants often undertake international migration at great costs of their own, incurring large debts, risking personal savings and family assets, and accentuating income risks and capital constraints, while the remittances are meager in the repair of such family economy.

Introduction
The 1973 oil boom and the subsequent undertaking of an unprecedented number of development projects in the Gulf Cooperation Council (GCC) countries Saudi Arabia, Qatar, Kuwait, Oman, Bahrain, and the United Arab Emirates (UAE) led to an extremely rapid increase in the demand for foreign labor (Arnold and Shah, 1986; Shah and Menon, 1999; Eelens, Schampers,

The author wishes to thank the International Organization for Migration (IOM) Dhaka, Bangladesh for providing access to the dataset of the Bangladesh Household Remittance Survey. Special thanks go to Rabab Fatima, Regional Representative, Samiha Huda and Disha Sonata Faruque IOM-Dhaka, who provided support and were a joy to work with.

Asian and Pacific Migration Journal, Vol. 20, Nos.3-4, 2011

389

390

ASIAN AND PACIFIC MIGRATION JOURNAL

and Speckmann, 1991). As a result, workers from relatively labor-surplus but capital-poor countries of Maghreb, Mashreq and South and Southeast Asia joined the labor markets of the GCC countries since the early 1970s (Shah, 1994; Esim and Smith, 2004). Over the decades, the GCC countries have emerged as a relatively permanent destination for migrant workers. In 2008, migrant workers were estimated to be nearly 77 per cent of total labor force in the GCC countries (Winckler, 2010:12; Baldwin-Edwards, 2011:9) Although labor migration to the GCC countries is designed to be temporary, the migration phenomenon is a permanent feature of societies in the region. This is because temporary labor migration has a structural role to play in the regions economy (Asis and Piper, 2008:426). Migrant workers in the GCC countries are hired under the kafala system for a specific duration. Additional measures such as not permitting family reunion, not allowing marriages with locals and not tolerating procreation outside of marriage ensure the transiency of migrant labor in the Gulf. The GCC member countries virtually follow a similar policy when it comes to hiring, retaining and deporting migrant workers (Kuptsch, 2006; Shah, 2008; Rahman, 2011b). This common migration policy in the Gulf countries has forced migrant workers and their families (spouse, children and extended family members) to live under transnationally split (Yeoh, Graham, and Boyle, 2002) conditions, interrupted only by visits to the home countries during annual or end-ofcontract leaves. Since migrants and their families live under transnationally split conditions, migrants remit back home to support the family members left-behind. As a result, labor migration is part of a livelihood strategy, whereby millions of left-behind families are maintaining better living standards in their home countries (Asis, 1995; Asis et al., 2004; Hugo, 2002; Pajo, 2008; Oda, 2004). The widely-shared viewpoint is that temporary migration brings about economic advantage for migrants and their families (Hugo, 2003; Schiller, 2010). However, this view of temporary migration hides the subtle and complex considerations that provoke the temporary migration and determine its course in the migration process. This is because potential migrants and their families in Asia need funds for the migration project, and investing in migration can erode or deplete the familys economic resources. The assumption that temporary migration benefits families links income risks and capital constraints in the low-income countries. However, the opportunity for temporary employment in a high-income country does not necessarily translate into economic advantage for migrants and their migrant families. This is because it does not adequately take into account the risks and costs borne by migrants and their families in the contemporary migration process. To understand the economic advantages of labor migration, we need to consider the risks that a migrant is exposed to and the implications it carries

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

391

for the migrant family economy. This is an overly neglected aspect of labor migration research, which this research attempts to fill. This research examines the emigration-family economy nexus by highlighting the undercurrent of risks in the migration process. This study draws from the experiences of Bangladeshi families with family members working in Saudi Arabia. Saudi Arabia was chosen for this study because it is the largest destination for Bangladeshi migrant workers and the largest remittance-source country for Bangladesh. In particular, the study investigates the following research questions: How does recruitment take place in Saudi Arabia? What are the economic costs of migration to Saudi Arabia? How much can migrant workers earn, save and remit from Saudi Arabia? What is their remittance behavior? How do remittance-receiving families decide on and use remittances? What role do remittances play in the family economy? The next section presents the theoretical and conceptual issues relating to international labor migration and family dynamics followed by a brief discussion on data sources for this study. The discussion next moves into the trends and patterns of Bangladeshi migration to Saudi Arabia. This section includes an overview of the profile of migrant workers in the 2009 survey, a discussion of the kafala system under which migrant workers are recruited to Saudi Arabia, and the economic costs of recruitment. The remaining sections cover the economic benefits of remittances, the implications of the costs and benefits on the familys economic resources, and the concluding section which sums up the findings of the study and their policy implications.

Theoretical and Conceptual Issues


Of the economic theories of labor migration, the neoclassical microeconomic model of individual choice views labor migration as the outcome of an individuals decision to maximize actual income or expected income (Todaro, 1976; Borjas, 1989). However, in the developing countries it is not individuals but families that decide about migration, mobilize resources to support the migration of family members, and take charge of receiving and allocating remittances (Grasmuck and Pessar, 1991:15). The new economics of labor migration (NELM) emerged to present migration as a family undertaking and to explain migration decision beyond income differentials. Rather, the NELM sees migration as a means to overcome market constraints notably credit and insurance - in the developing countries and shifts the locus of decisionmaking from the individual to the family. The family or household context links individual migrant behavior with expectations of and obligations toward the family members left-behind (Stark, 1991; Lauby and Stark, 1988). The NELM recognizes that in the developing world, families and households are confronted with imperfect or limited access credit and insurance.

392

ASIAN AND PACIFIC MIGRATION JOURNAL

Among other strategies, families resort to sending one or more members to migrate to maximize income as well as to self-insure against risks to income, production and property, or to gain access to scarce investment capital. In other words, labor migration is part of various family strategies for riskminimization and capital accumulation (Stark, 1991). Financial remittances (hereafter remittances) that flow back to migrant families represent the benefits that help families overcome the aforementioned local market constraints and risks. However, temporary labor migration is not necessarily free of risks, it does not always minimize the risk of income failure, and it does not guarantee capital accumulation. A migrant often commences migration for work by incurring large debts to pay many migration-related fees. Investing in migration entails risking personal savings and valuable family assets that undermines the familys income and aggravates income risks and capital constraints. The kafala or sponsorhip system under which migrants are hired in the Gulf countries, the recruitment procedures they undergo and the economic costs of the migration process pose risks and difficulties to migrants. The kafala system has given rise to practices and conditions that render migrant workers vulnerable in the destination countries lack of proper work contract, breach of contract, limited horizontal and vertical mobility in the different economic sectors, and inadequate legal mechanisms for upholding workers rights (Baldwin-Edwards, 2011; Esim and Smith, 2004; HRW, 2006, 2008, 2009). These conditions undermine the well-being and protection of migrants, and they also have a direct bearing on the ability of migrants to remit to their families back home. Under these precarious conditions, labor migration incurs more costs than benefits to migrants and their families. As detailed in the paper, the costs and risks to migrants and their families begin even while migrants are still in the home country. Prior to migration, aspiring migrants must comply with requirements which involves dealing with various actors in the recruitment process (Gamburd, 2000; Rahman, 2011a). These entail expenses which migrants hope to recover once they start working overseas. Differences in the recruitment process and pre-migration costs have been noted in predominantly male migrant sending countries, such as Bangladesh and Pakistan and predominantly migrant sending countries, such as the Philippines and Indonesia. Particularly in the case of domestic workers, the recruitment costs are usually assumed by the sponsor-employer which does not require upfront payment by the migrant worker (fees are later paid by the worker through salary deductions) (Lindquist, 2010; Rahman and Lian, 2009). In the case of male migrant workers, they generally pay a fee to the recruitment agency prior to departure (Rahman, 2011a). Lindquist elaborates on the gendered differentiated patterns of recruitment by showing that capital flows down in the

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

393

migration of women while capital flows up in male migration, i.e., from the migrant to the recruitment agency and sponsor (Lindquist, 2010). The economic costs of migration, thus, are more burdensome for male migrants in the recruitment and pre-migration stage. As indicated earlier, other than recruitment, once migrants are in the destination countries, they may be exposed to other risks generated by unfavorable working and living conditions and limited access to services and support systems, which can have economic implications for migrants and their families. There is a need to study temporary labor migration as a process which takes into account potential victimization and exploitation that migrants experience throughout the process. This study links these considerations vis-a-vis family economic dynamics. Furthermore, in studying the implications of labor migration on family economic dynamics, it is important to shed light on both the outflow of family economic resources and the inflow of remittances to the family. This approach, it is hoped, will contribute to a more comprehensive understanding of migration not only as a family strategy to reduce income risks and capital constraints, but also as a strategy that may incur costs and risks to migrants and the family economy.

Data Sources
This research is based principally on the Bangladesh Household Remittance Survey (BHRS) conducted in 2009. The BHRS collected information from a nationally representative sample of 10,926 migrant households. The BHRS was implemented by the International Organization for Migration (IOM) in Dhaka with financial support from Department for International Development the United Kingdom (DFID- UK). With a nationally representative sample, findings from the BHRS can be generalized to the population of Bangladeshi migrant households. In addition to the survey data, the study also draws from qualitative interviews of prospective migrants, returnees and members of migrant households in Bangladesh conducted in the second half of 2009. The BHRS covered migrant households from all seven administrative divisions of Bangladesh.1 The districts in the seven divisions of the country were divided into two strata, with one stratum consisting of More Concentration of Migrant (MCM) households and the other stratum consisting of

1 Bangladesh is divided into major administrative regions called divisions and each division is further split into districts. In total, there are seven divisions and 64 districts in the country.

394

ASIAN AND PACIFIC MIGRATION JOURNAL

Less Concentration of Migrant (LCM) households. Following this, clusters were formed with one or more mauzas (closely synonymous with a village), depending on the clusters size as set in terms of the number of households. These clusters were selected independently from each stratum using the probability proportional to size (PPS) method of selection. The total sample was made up of 457 clusters (i.e., 257 from MCM districts and 200 from LCM districts). All households in every selected cluster were listed, identifying only the migrant households. Household listings were done by taking a complete census of the households in each of the clusters. This involved visiting every household in the designated area. In the survey, a migrant household has been defined as a household that had at least one of its members living/working abroad for a period of at least one year at the time of the survey. The selection of the migrant household was made independently of the legal status of migrants in the destination country (i.e., regular or irregular). The head or other responsible member of the household was interviewed in the survey. The survey covered a wide range of migration issues encompassing socio-economic background, application process and economic costs of migration, working and living conditions, remittances, and impacts of remittances on households. This paper used the data for the 4,427 migrants who were working in Saudi Arabia.

Bangladeshi Migration to Saudi Arabia


Saudi Arabia, the sacred land of Islamic devotion to Muslims from all around the world, is also the largest temporary migrant-worker receiving country in the Middle East. Like other GCC countries, labor migration to Saudi Arabia started after the 1973 oil price hike. The growth of the foreign population in Saudi Arabia was steady and remarkable: 4.63 million foreigners in 1992, 5.25 million in 2000, and 8.42 million in 2010 (Fargues, in this volume). Although hosting the largest number of foreigners among the GCC countries, the foreign population in Saudi Arabia has never surpassed the local population. Nevertheless, as of 2010, 31 percent of Saudi Arabias total population comprised of foreigners (Fargues, in this volume). Broadly, foreigners can be categorized into low-skilled and high-skilled/professional migrants. The majority of foreigners are low-skilled migrants, working in construction, manufacturing, service, agriculture, and domestic sectors and living in camps with other coworkers or owners residences in the case of domestic workers. Saudi Arabia is a popular destination for Bangladeshi migrants. The official record of labor migration flows to the GCC countries was initiated by the Bureau of Manpower, Employment and Training (BMET) in 1976. According to BMET, the formal recruitment of Bangladeshi labor to Saudi Arabia started in 1976 with only 217 migrants. The total number of migrants who

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA FIGURE 1 BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA, 1976-2010

395

250,000

200,000

150,000

100,000

50,000

SOURCE: Data are from the Bureau of Manpower, Employment and Training (BMET) data, http:/ /www.bmet.org.bd/BMET/viewStatReport.action?reportnumber=14, accessed on 23 December 2011.

went to Saudi Arabia for work between 1976 and 1980 were nearly 20,000, approximately 300,000 between 1981 and 1990, about 1.18 million between 1991 and 2001, and around 1.14 million for the period 2001-2010 (Figure 1). In total, 7.13 million Bangladeshi migrants sought overseas employment between 1976 and 2010 and of these migrants, nearly 2.58 million or 36.18 percent joined the labor market of Saudi Arabia. Bangladeshi migrants in Saudi Arabia remitted nearly USD21.42 billion to their families between 2000 and 2011 (Figure 2).

Profile of Migrant Workers to Saudi Arabia


Drawing from the survey data on the 4,427 migrants working in Saudi Arabia, this section will describe their socio-demographic profile. Almost all 98.5 percent of the migrants were males. Although womens participation in various economic sectors has increased in recent years in Bangladesh, their migration out of Bangladesh remains insignificant. Religious conservatism and cultural perception against women migrants have restricted women from seeking employment overseas (Ullah, 2010; Oishi, 2005). Overall, nearly 39 percent of the migrants were in their 20s, 35 percent were in their 30s and around 26 percent were in their 40s and above, with the

396

ASIAN AND PACIFIC MIGRATION JOURNAL FIGURE 2 REMITTANCES FROM SAUDI ARABIA TO BANGLADESH, JULY 1998 - JUNE 2011

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 20101999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

SOURCE: Data are from BMET, Ministry of Expatriates Welfare and Overseas Employment (MEWOE) and Bangladesh Bank. Data from Bangladesh Bank were available at http:/ /www.bangladesh-bank.org/econdata/wagermidtl.php, accessed on 23 December 2011.

average age being 33.3 years. Bangladeshi migrants went to Saudi Arabia without other family members. Nearly 67 percent of migrants were married, with wives remaining in Bangladesh. Of married migrants, nearly 87 percent had children, with the average number of children at 2.36. Wives left behind were primarily homemakers, taking care of the children and their in-laws (i. e., the families of their husbands). Approximately 30 percent of migrants received only one to five years of schooling while 50 percent completed six to 10 years. Of the remaining 20 percent, half had no formal education while the other half attained secondary and/or other vocational certificates. In terms of occupation, around 79 percent were working before their migration to Saudi Arabia; they were mostly engaged in agriculture, small businesses, and the urban informal economy. In Saudi Arabia, migrants were working in construction, maintenance, transport (driving), manufacturing (factory work), restaurants or hotels (cleaners and waiters), general labor, and gardening. Approximately 23 percent of migrants worked and resided in Saudi Arabia between one to two years, 23 percent between three to five years, 33 percent between six to 10 years. The remaining nearly 21 percent had been working in Saudi Arabia for a period of 11 years and more. On average, the

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

397

duration of stay of migrants in Saudi Arabia was 7.03 years, which may be a sufficient period to offer a clear indication of the benefits of migration for migrants and their households.

The Kafala System and Worker Recruitment to Saudi Arabia


The recruitment of migrant workers to Saudi Arabia and other GCC countries is governed by the kafala or sponsorship system (Longva, 1999; Colton, 2010; Shah, 1994; Baldwin-Edwards, 2011; De Bel-Air, 2011).2 Under this system, a migrant has to be sponsored by is a GCC citizen. The kafeel or sponsor (which may be the employer or distinct from the employer), assumes full economic and legal responsibility for the migrant worker during the contract period. A kafeel may be an individual, a placement agency, or a company. The system works such that the migrant worker can only work for a kafeel for a specific period. Kafeels often hold the workers passport and other travel documents. Foreign workers are not allowed to marry or be involved in sexual relationships with locals. However, professional foreigners (expatriates) can marry locals, but citizenship is not guaranteed and local men enjoy greater privileges over local women when it comes to international marriage and citizenship issues (e.g., Hadid, 2005). The overall emphasis of the kafala system is control and to ensure flexibility to fluctuations in the labor market. The kafala system has given birth to the so-called visa trading, a multimillion dollar industry in the Gulf (Shah, 2008). Visa trading involves the sale of a work visa. In the UAE, for instance, a work visa for an Indian is sold for around USD2000 (or AED 7,500) (Shah, 2008:9). The scale of visa trading is so massive that the Saudi Minister of Labor reported that 70 per cent of the visas issued by the government were sold on the black market (Shah, 2008:9). The kafala system has been met with much criticism over the years. It has been blamed for encouraging corruption, visa trading, and the importation of more workers than can be accommodated by the labor market (De Bel-Air, 2011; Shah, 2010; Colton, 2010). Since the system generates lucrative incomes for local sponsors, governments in the Gulf countries have so far failed to stop visa trading, notwithstanding the genuine interests on the part of the Gulf governments to stop the practice. Recruiting agencies and migrant networks play a critical role in the recruitment of other South Asian migrants to the Gulf countries (Gamburd, 2000; Shah and Menon, 1999; Arif, 2009; Zachariah et al., 2001; Gunatilleke,

2 Further details about the kafala system and recruitment in the GCC countries can be found in Rahman, 2011a. Khan and Harroff-Tavel in this volume also provide an overview of the kafala system.

398

ASIAN AND PACIFIC MIGRATION JOURNAL FIGURE 3 RECRUITMENT OF BANGLADESHI WORKERS TO SAUDI ARABIA
Subagents

Recruiting Agents

WorkVisaor FreeVisa

Prospective Migrantsin Bangladesh

1992; Osella and Osella, 2000). Both actors are also involved in the recruitment of Bangladeshis to Saudi Arabia (Figure 3). In the recruitment system assisted by a recruiting agency, the process involves the following episodes and actors. A recruiting agency in Saudi Arabia places a demand letter to its counterpart in Bangladesh. The recruiting agency in Bangladesh then searches for prospective migrants and asks them to submit the required documents (passport, pictures, biographic information and partial payment) to begin the process. The recruiting agency in Bangladesh relies heavily on intermediaries called sub-agents, who act as mediators between a prospective migrant and a licensed recruiting agent. These sub-agents help prospective migrants find jobs and help agencies find prospective workers in a more timely fashion. Subagents charge fees to recruiting agencies for their services. Once the potential migrant submits all documents to the sub-agent, the sub-agent passes the documents to the recruiting agency for further action. Upon receiving the documents from sub-agents, the recruiting agency in Bangladesh contacts its counterpart in Saudi Arabia for visa processing. The potential kafeel then secures the visa from the relevant authority in Saudi Arabia and sends it to the recruiting agency in Bangladesh. It usually takes a few weeks from the submission of documents to the kafeel in Saudi Arabia to the delivery of the work visa to the recruiting agency in Bangladesh. The recruitment procedures described here are not specific to the BangladeshSaudi Arabia corridor. Similar recruitment procedures describe the recruitment of Bangladeshis and other South Asian workers to other GCC countries

Recruiting Agents

SponsorEmployer (Kafeel):SaudiArabia

FlyingvisaHolders

Freevisa Holders Freeandflyingvisa

Mediators

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

399

(Arif, 2009; Arnold and Shah, 1986; Gamburd, 2000; Gunatilleke, 1992; Oda, 2004). As migration matures, many potential migrants learn more about the process of migration and how to seek alternative services for jobs in Saudi Arabia. Instead of going through agencies, potential migrants may have jobs arranged with a kafeel in Saudi Arabia through personal networks. A working visa arranged through personal networks is called urro visa in Bengali or flying visa in English, so called because it flies directly from a migrant broker in Saudi Arabia to a prospective migrant in Bangladesh. In other words, it bypasses local recruiting agencies and their sub-agents (for details, see Rahman, 2011a). Arranging a flying visa usually proceeds as follows (see Figure 3). A migrant broker finds a job for a friend or relative usually with his/her kafeel or the kafeels network of friends and relatives. After successfully identifying a potential kafeel, the migrant broker gathers the required documents and passes them to the potential kafeel for a work visa. Once a work visa is procured, the migrant broker sends it to the potential migrant in Bangladesh. Apart from the flying visa, there is also the free visa (Rahman, 2011a). Although the free visa is not an official category, the term is widely used among migrant communities. Pakistani migrants call it azad (free) visa in Urdu. This unofficial category of visas allows a potential migrant to enter a GCC country for work under the kafala system, but the sponsor-employer (kafeel) who officially sponsors the migrant does not offer paid work. Instead, a free visa holder finds a job on his own, but by working for an employer other than his kafeel, the migrant worker becomes illegal and vulnerable to deportation. As discussed earlier, visa trading generates additional incomes for kafeels, thereby driving irregular recruitment practices in Saudi Arabia. Of the different visa types, it is the free visa that exposes migrants to job insecurities and deportation. The constellation of actors and their vested interests at different points of the recruitment system increase the economic costs of migration. The greater the recruitment costs, the longer time migrants need to recover their expenses. The next section discusses this issue in detail.

The Economic Costs of Migration to Saudi Arabia


The economic costs of migration involves not only the actual financial costs of migration but also the embedded costs, that is, the sources of arranging the financial cost of migration and their potential impact on the family economy. To secure a job in Saudi Arabia, a potential migrant is required to pay part of the financial costs in advance this is usually about one-fourth to one-half of the total costs to the middlemen/sub-agents. The remaining amount is usually paid in several installments depending on the progress of the visa

400

ASIAN AND PACIFIC MIGRATION JOURNAL

application. All dues must be paid to the recruitment agency before a prospective migrant flies to Saudi Arabia. However, in the migrant broker-initiated recruitment, some fees may be waived, especially when prospective migrants are close relatives of migrant brokers. After paying recruitment-related fees, migrants have to wait for some time before they can actually leave for Saudi Arabia. The waiting time between the first payment and the departure for Saudi Arabia should not ideally take more than three months. As discussed earlier, the issuing of a working visa in Saudi Arabia and transferring it to the recruiting agency or the prospective migrant in Bangladesh should not require more than a few weeks. Of the surveyed migrants, around 57 percent of migrants received the work visa and flew to Saudi Arabia within three months. However, 11 percent waited between three and five months while 32 percent had to wait between six and 13 months, or even longer. On average, a migrant had to wait around 5.22 months to complete the recruitment procedures in Bangladesh. This is because subagents often manipulate the waiting time to profit out of migrants initial payments. Since the demand for visas is higher than the supply of visas, potential migrants are forced to make extra payments to secure a job placement, generating additional revenues for subagents. For migrants, advance payment and the delay in deployment increases the costs of migration as they often borrow from moneylenders who exact high interest rates. The increased costs undermine the family economy as sourcing additional funds put pressure on family incomes. Once prospective migrants start paying the first installment, they are almost pressured to continue with the recruitment process since it is impossible to recover their expenses should they decide to withdraw their application. This exposes potential migrants to victimization and exploitation even in the country of their origin. Figure 4 presents the economic costs of migration to Saudi Arabia. It maps out three important aspects about the economic costs of migration, namely, the sources of funds, the contribution of multiple sources to the needed funds, and the allocation of the costs that go into formal service fees and intermediary fees. Based on data from the 2009 survey, the average cost of migration to Saudi Arabia amounted to BDT (Bangladeshi Taka) 206,058 or USD3,000.3 The Bangladesh Government set BDT 84,000 (USD1,230) as the maximum recruiting fee for migrants going to Gulf countries and Malaysia (Martin, 2010:12). However, financial transactions between a prospective migrants and recruit-

3 All Bangladeshi currency (BDT) figures were converted into USD in early 2010. The exchange rate at the time was USD1=BDT68.68

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA FIGURE 4 ECONOMIC COSTS OF MIGRATION


Disbursement

401

ServiceFees(24%)

IntermediariesFees(76%)

Economiccostsofmigrationto SaudiArabia:(BDT206,058) US$3,000

Personal Savings4%

Land 24%

Loan 52%

Others 20%

%Contributionofmultiplesourcestototaleconomiccosts
Personal Savings(9%) Land 50% Loan 72% OtherSources 19%

%Contributionofmultiplesourcestorepaymigration relatedcosts

ing agencies are not strictly monitored by government agencies. As a result, the government-set fee is not followed by recruiting agencies. The average cost of migration to Saudi Arabia (BDT 206,058 or USD3,000) was an amount that was virtually beyond the personal savings of migrants. Most migrants had to rely on multiple sources to raise the funds for migration. According to the survey responses, the major sources of securing funds were as follows: selling land (27 percent), mortgaging land (23 percent), taking a loan (72 percent), and disposing of other family assets such as livestock and jewelry (19 percent). Only nine percent of migrants used personal savings to meet the expenses of migration. Figure 4 also outlines the contribution of each source to the total costs of the migration project. Of the total costs, 24 percent were sourced from the selling or mortgaging of land, 52 percent came from loans and other sources such as contribution from in-laws, dowry, and selling of family assets (e.g., livestock and jewelry) constituted nearly 20 percent. Four percent were derived from personal savings. Considering the high cost of migration, this study further investigates the major areas of expenses in the recruitment process to offer a glimpse into the

402

ASIAN AND PACIFIC MIGRATION JOURNAL

distribution of economic costs across different service providers. The study divides the economic costs of migration into: (1) formal service fees that include government fees, passport fees, wage earners contribution and other relevant mandatory service fees in Bangladesh, and (2) mediators fees that include fees charged by intermediaries and recruiting agencies for their services. The former accounts, on average, for about 24 percent of the total costs, and the remaining 76 percent represent intermediaries fees. It is important to note that, regardless of the channels of recruitment, intermediaries fees also include kickback fees which are inherent in the economic costs of migration to Saudi Arabia (for details about visa-trade, see Shah, 2008; De Bel-Air, 2011). The bulk of the intermediaries fees actually goes to the recruiting agencies or sponsor-employers on the Saudi side (see also, De Bel-Air, 2011; Gardner, 2010). Although the Bangladeshi media often blames the recruiting agencies in Bangladesh for exorbitant fees, they are in fact making a tiny profit while the bulk of the profit goes to the other side of the recruitment end that deserves more in-depth investigation. Considering the enormous costs of securing an overseas work contract, potential migrants need to tap different sources to raise the needed amount. To invest in migration, migrants sell off family assets, borrow from money lenders who charge high interest rates, and exhaust personal and/or family savings. The migration project can undermine family economy in two ways. First, it diminishes regular family incomes because income-generating assets, such as land, livestock, and the like are sold or mortgaged to raise money for recruitment-related fees. Second, loan repayments severely constrain family resources. To ascertain some of the impacts of migration on the family economy, this study looked into the size of landholding and loan status of migrants and their families. Land is a crucial income contributor and status marker in South Asia (Oda, 2008). Nearly 50 percent of surveyed migrant households sold or mortgaged land to repay the migration expenses, which means that these households have been deprived of regular incomes from land. Additionally, the land-ownership pattern is very polarized in Bangladesh. Rapid population growth and the inheritance law have caused the fragmentation of land over time and the number of landless households has been over 50 percent in Bangladesh (Monsur, 2008). In the survey, nearly 42 percent of households had no agricultural land, that is, they were landless. The remaining 58 percent may be considered marginal land-owners as they own certain amount of agricultural land. On average, they owned approximately 181 decimal of agricultural land, which is much lower than the minimum land a rural household requires for subsistence for a family of five members in Bangladesh (Bertocci, 1972).

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

403

Apart from landholdings, 72 percent of migrant households took out loans from money lenders (69.05 percent) and NGOs (2.75 percent). At the time of the survey, nearly 61 per cent of migrants had outstanding loans to repay; the average loan amounted to BDT157,057 or USD2,286 (USD1=BDT68.68). Although more than some 77 percent of the migrants were working in Saudi Arabia for a period of three years or longer, the majority of migrant households were still saddled with sizable debts. It is important to note that the interest rate for migration loans is different from other types of loans, such as those for agriculture, business, weddings, and festivals (Rahman, 2009). Since migration is perceived to yield high returns, moneylenders charge up to seven to 10 percent interest per month or roughly 100 percent per year. If the interest is compounded, the debt will double in less than a year and triple in less than two years. In the decision to seek overseas employment, there is indeed a trade off between the possibility of higher incomes and the potential destruction of the existing family economy. Many choose migration in the hopes that remittances can compensate for the potential collapse of the existing family economy. Whether the hope that they pinned on remittances is realistic is discussed in the next section.

Remittances to Migrant Families


We have so far seen the outflow of family resources and its implications on the family economy. Successful migration can outweigh the pre-migration costs through the remittances migrants are able to send their families. However, the amount and frequency of remittances are important variables for the economic well-being of migrant families. The amount of remittances is contingent on the monthly incomes of migrants overseas. Therefore, this study examined the monthly remuneration of migrants in Saudi Arabia. On average, the monthly remuneration of the migrants was BDT18,723 or USD273. While this amount is several times higher than a job would have offered in Bangladesh, if the monthly salary is estimated against the economic costs of migration, which was on average BDT206,058 or USD3,000, a migrant would need roughly eleven months to recoup his/her financial cost of migration, if other expenses are controlled. Figure 5 presents a schema of remittances and their implications for the family economy. First, the figure presents the average amount of remittances per transfer and the frequency of remittance transfers in a year. Second, the study maps out the major uses of remittances, notably family expenses, repayment of loan, medical, education and income generation. Third and finally, the paper discusses the implications of remittances on remittancereceiving families in terms of food, education, and incomes. On average,

404

ASIAN AND PACIFIC MIGRATION JOURNAL FIGURE 5 REMITTANCES AND THE FAMILY ECONOMY: THE SAUDI ARABIA-BANGLADESH REMITTANCE CORRIDOR

InflowofRemittancestoHouseholds

Amountofremittances eachtime:US$324

Frequencyofremittances: FourtimesinaYear

RemittancestoMigrantHouseholds: US$1,296inayear

FamilyExpenses (88%)

Loan Repayment (31%)

Medical (22%)

Education (19%)

LocalIncome Generation (18%)

MigrantHouseholds:MajorUseofRemittances
ImprovedFood Consumption(74%) EnhancedEducational Opportunity(67%) Increased Incomes(27%)

migrants remitted approximately four times a year. The average amount of each transfer was BDT22,258 or USD324. If average remittances and frequency of remittances are calculated, a migrant household received around USD1296 in a year. Given the annual flow of remittances to migrant households, a migrant needs roughly 2.31 years to recover the actual financial cost of migration if other expenses are controlled. In actual fact, it takes migrants more than 2.31 years to repay loans because of the deficit in family incomes. This study also explored who migrants usually remit to and who manages the remittances in the households. A migrant usually remitted to the person who was the head of the household in Bangladesh. As per the survey, on average, 31 percent of migrants remitted to their spouses (i.e., wives) it may be recalled that nearly 32 percent of migrants in Saudi Arabia were married, as discussed earlier about marital status of migrants in Saudi Arabia. Interestingly, 55 percent of migrants remitted to their fathers (67 percent of migrants

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

405

in the sample were unmarried). The remaining migrants remitted to other members of the family, such as sisters and brothers and, in some cases, to other close relatives. The control and management of remittances, especially when migrant workers (remitters) are away, are critical to understanding intrahousehold relations and its gendered outcomes. In terms of making decisions about the management of remittances, 71 percent of recipients revealed that they made the decision themselves, two percent made the decision as instructed by the migrants overseas, five percent of recipients who were not family members (migrant in Saudi Arabia remitted to outside family members) made the decision themselves, and 22 percent said that migrants and recipients mutually decided on how to manage remittances. The latter figure was predominant among recipients who were wives of migrants, hinting at improved gender relations between the wife at home and the overseas-based husband. The use of remittances is an important indicator of the familys economic resources. Migrant families used the funds for a myriad of purposes, such as family basic expenses (food and clothing), purchasing land or property, repayment of debts, savings, house construction, funding the marriage of a sibling, education, medical treatment, religious festivals (e.g., Eid-ul-Fitr and Eid-ul-Azha), purchasing cattle and so on. The five major areas of use of remittances are family expenses, followed by loan repayment, medical treatment, education and local income generation. Eighty-eight percent of households used remittances for their familys basic expenses, 31 percent for loan repayment, 22 percent for medical treatment, 19 percent for education, and 18 percent for local income generation. In addition to economic purposes, remittances were also used for religious festivals (six percent) and marrying off brothers or sisters (1.31 percent). Nearly six percent of households saved part of the remittances for future use. The use of remittances suggests that migrant households prioritized the expenses as per local requirements. For instance, it may seem unproductive to spend hard-earned remittances for religious festivals or the marriage of siblings. However, social expectations in the communities of origin and local perceptions about development (such as capacity to marry off grown-up sisters) are important to consider as these touch on notions of honor and prestige (Gamburd, 1995; Rahman, 2009). Therefore, there is a need to incorporate the local meaning of development in the broader migration and development debate. Remittances showed some visible impacts on migrant families in terms of food consumption, education, and local income generation. Around 74 percent of families reported having improved food consumption and nearly 67 percent of families reported having enhanced educational opportunities. However, the role of remittances in income generation was mixed: nearly 27

406

ASIAN AND PACIFIC MIGRATION JOURNAL

percent of migrant families reported an increase in incomes through establishing new sources of incomes, investing or expanding existing sources of incomes and deposits in banks/ buying stocks or saving certificates. However, given the extent of landlessness and indebtedness, the low use of remittance for income generation purposes is not surprising.

Conclusion
This study has addressed the attendant risks in the temporary labor migration process and its economic implications for migrant families in Bangladesh. The study particularly highlights the nature and extent of risks that migrants are exposed to in the migration process. While the NELM explains migration as a strategy to minimize risks to incomes and failures in the local markets, it ignores the risks and costs to migrants and their families. This study has shown that migrants often incur large debts and exhaust personal savings and family assets that undermine family incomes and aggravate income risks and capital constraints. The research has shown that in the recruitment process, migrants are exposed to victimization and exploitation in at least two moments: (1) the deliberate delay in the deployment of migrants increases the economic costs of migration, and (2) the offer of a free visa to migrant workers, which actually hinders them from legally working in Saudi Arabia. The issue of the economic costs of migration not only exposes migrants to victimization and exploitation but also undermines the family economy. The study has indicated how the financial costs of migration expose migrant families to risks of losing local incomes and incurring debts. In terms of the implications of remittances on the family economy, the study reports that 74 percent of migrant households enjoyed improved food consumption, 67 percent had enhanced educational opportunities, and 27 percent had increased incomes. The receipt, control, and management of remittances also have implications for family relationships, especially between husbands and wives. At the policy level, this study has identified three areas that require policy intervention. First, specific policy intervention is required to stop labor migration under the free visa category. Second, the financial cost of migration is excessively high and government may consider imposing restrictions on maximum recruitment costs and to enforce these measures. Third and finally, government may introduce soft loans for all applicants for overseas jobs so that prospective migrants will not be overly burdened by excessive interest rates. This will also help retain existing regular income flows to households and enable them to benefit from remittances.

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

407

By providing gainful employment to around eight million migrants, mainly from South Asia, Southeast Asia, Maghreb and Mashreq regions, and allowing them to remit around USD 29 billion in a year (as in 20104), Saudi Arabia is indeed making a vital contribution to socio-economic transformations in the migrant source countries throughout the region. While this contribution deserves more recognition from sending countries, the high economic costs of migration and reports of maltreatment of migrant workers in Saudi Arabia are also a matter of concern for many sending countries (for details, see HRW, 2008). Therefore, there is a need to adopt policy measures to ensure the fair treatment and to promote the welfare of migrant workers in Saudi Arabia. As a host country, the responsibility for improving the status of migrant workers principally lies with Saudi Arabia. Furthermore, Saudi Arabia is the birth place of a great religion that enshrines and promotes core human values, including fair treatment, and this also puts much hope for immediate attention. Research on migration and its implications on family economy in the South Asia-GCC migration corridor is an understudied area and much work is required to understand the risks that migrants and their families assume in the migration process. This study should be seen as an initial attempt to conceptualize emigration and the family economy and there is much scope to further the analysis of the topic.

4 Zawya Leading Business Intelligence on the Middle East and North Africa, http:/ /www.zawya.com/story.cfm/sidZAWYA20110908030328/Foreigners_in_Saudi_ remitted_over_29bn_in_2010, accessed on 12 September 2011.

408

ASIAN AND PACIFIC MIGRATION JOURNAL

REFERENCES
Arif, G.M. 2009 Recruitment of Pakistani Workers for Overseas Employment: Mechanism, Exploitation and Vulnerabilities. Working Paper no. 64, International Labor Organisation, Geneva. Arnold, Fred and Nasra M. Shah, eds. 1986 Asian Labor Migration: Pipeline to the Middle East. Boulder, CO: West View. Asis, Maruja M.B. 1995 Overseas Employment and Social Transformation in Source Communities: Findings from the Philippines, Asian and Pacific Migration Journal, 4(2-3):327-246. Asis, Maruja M.B. and Nicola Piper 2008 Researching International Labor Migration in Asia, The Sociological Quarterly, 49(3):423-444. Asis, Maruja M.B., Shirlena Huang and Brenda S.A. Yeoh 2004 When the Light of the Home is Abroad: Unskilled Female Migration and the Filipino Family, Singapore Journal of Tropical Geography, 25(2):198-215. Baldwin-Edwards, Martin 2011 Labor immigration and Labor markets in the GCC countries: national patterns and trends, LSE Global Governance, Number 15 (March): 1-73. Available at http:/ / www2.lse.ac.uk/government/research/resgroups/kuwait/documents/BaldwinEdwards,%20Martin.pdf, accessed on 8 December 2011. Bertocci, Peter J. 1972 Community Structure and Social Rank in Two Villages in Bangladesh, Contributions to Indian Sociology, 6(1):28-52. Borjas, George J. 1989 Economic Theory and International Migration, International Migration Review, 23(3):457-485. Colton, Nora Ann 2010 The International Political Economy of Gulf Migration. In Migration and the Gulf. Washington, DC: The Middle East Institute. De Bel-Air, Franoise 2011 Reforming the Sponsorship (Kafala) in the GCC Countries: What Socio-political Stakes? The Case of Saudi Arabia. Paper presented at Workshop 12, Migration in the Gulf, Gulf Research Meeting, Cambridge, 6-9 July. Eelens, Frank, T. Schampers and J.D. Speckmann 1991 Labor Migration to the Middle East: From Sri Lanka to the Gulf. London: Kegan Paul. Esim, Simel and Monica Smith 2004 Gender and Migration in Arab States: The Case of Domestic Workers. Geneva: International Organization for Migration

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

409

Gamburd, Michele Ruth 2000 Transnationalism and Sri Lankas Migrant Households: The Kitchen Spoons Handle. New Delhi: Vistaar Publications.

1995

Sri Lankas Army of Housemaids: Control of Remittances and Gender Transformations, Anthropologica, 37(1):49-88.

Gardner, A.M. 2010 City of Strangers: Gulf Migration and the Indian Community in Bahrain. London: Cornell University Press. Grasmuck, Sherri and Patricia R. Pessar 1991 Between Two Islands: Dominican International Migration. Berkeley: University of California Press. Gunatilleke, G., ed. 1992 The Impact of Labor Migration on Households: A Comparative Study in Seven Asian Countries. Tokyo: UNU Press. Hadid, Diaa 2005 Scheme Should Not Include Arab Women, Say GCC Nationals, Gulf News, 27 July. Available at http:/ /gulfnews.com/news/gulf/uae/visa/scheme-shouldnot-include-arab-women-say-gcc-nationals ETC, accessed on 20 December 2011. Hugo, Graeme J. 2003 Migration and Development: A Perspective from Asia. IOM Migration Research Series, No.14. Geneva: International Organization for Migration.

2002

Effects of International Migration on the Family in Indonesia, Asian and Pacific Migration Journal, 11(1):13-46.

Human Rights Watch (HRW) 2009 The Island of Happiness: Exploitation of Migrant Workers on Saadiyat Island, Abu Dhabi, Human Rights Watch Report. May. New York.

2008

As if I am not Human: Abuses against Asian Domestic Workers in Saudi Arabia, Human Rights Watch. New York.

2006

Building Towers, Cheating Workers: Exploitation of Migrant Construction Workers in the UAE. Human Rights Watch Report. November. New York.

Kuptsch, Christiane, ed. 2006 Merchants of Labor. Geneva: International Organization for Migration. Lauby, J. and O. Stark 1988 Individual Migration as a Family Strategy: Young Women in the Philippines, Population Studies, 42(3):473-486.

410

ASIAN AND PACIFIC MIGRATION JOURNAL

Lindquist, Johan 2010 Labour Recruitment, Circuits of Capital and Gendered Mobility: Reconceptualising the Indonesian Migration Industry, Pacific Affairs, 83(1):115-127. Longva, A. N. 1999 Keeping Migrant Workers in Check: The Kafala System in the Gulf, Middle East Report, 211(Summer):20-22. Martin, Philip 2010 The Future of Labour Migration Cost. In World Migration Report 2010. Geneva: International Organization for Migration. Monsur, Sadman Khaled 2008 Landlessness and Its Impact on Economic Development, Star Campus, 2(86):14 September. Oda, Hisaya, ed. 2004 International Labor Migration from South Asia. Tokyo: Institute of Developing Economies. Oda, Hisaya 2008 The Impact of Labor Migration on Household Well-being: Evidence from Villages in the Punjab, Pakistan. In Globalization, Employment and Mobility: The South Asian Experience. Edited by H. Sato and M. Murayama. New York and Tokyo: Palgrave and IDE-JETRO. Oishi, Nana 2005 Women in Motion: Globalization, State Policies, and Labor Migration in Asia. Stanford: Stanford University Press. Osella, F. and C. Osella 2000 Migration, Money and Masculinity in Kerala, The Journal of the Royal Anthropological Insitute, 6(1):117-133. Pajo, Erind 2008 International Migration, Social Demotion and Imagined Advancement: An Ethnography of Socioglobal Mobility. New York: Springer. Rahman, Md. Mizanur 2011a Recruitment of Labor Migrants in the GCC Countries: The Case of Bangladeshis. Working Paper No 130, Institute of South Asian Studies, National University of Singapore.

2011b Bangladeshi Migrant Workers in the UAE: Gender-differentiated Patterns of Migration Experiences, Middle Eastern Studies, 47(2):395-412.

2009

In Quest of Golden Deer: Bangladeshi Transient Migrants Overseas. VDM Verlag: Germany.

BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA

411

Rahman, Md Mizanur and Lian Kwen Fee 2009 Gender and the Remittance Process: Indonesian Domestic Workers in Hong Kong, Singapore, Malaysia, Asian Population Studies, 5(2):103-125. Schiller, Nina Glick 2010 A Global Perspective on Migration and Development. In Migration, Development and Transnationalism: A Critical Stance. Edited by Glick Nina Shiller and Thomas Faist. Oxford: Berghahn Books. Shah, Nasra M. 2010 Building State Capacities for Managing Contract Worker Mobility: The Asia-GCC Context. In World Migration Report 2010. Geneva: International Organization for Migration .

2008

Recent Labor Immigration Policies in the Oil-Rich Gulf: How Effective are they likely to be? ILO Asian Regional Programme on Governance of Labor Migration Working Paper No 3, Bangkok: International Organization for Migration.

1994

Arab Labor Migration: A Review of Trends and Issues, International Migration, 32(1):3-27.

Shah, Nasra M. and Indu Menon 1999 Chain Migration through the Social Network: Experience of Labor Migrants in Kuwait, International Migration, 37(2):361-382. Stark, Oded 1991 The Migration of Labor. Oxford: Basil Blackwell. Todaro, Michael P 1976 Internal Migration in Developing Countries: A Review of Theory, Evidence, Methodology and Research Priorities. Geneva: International Labor Office. Ullah, AKM Ahsan 2010 Rationalizing Migration Decisions: Labor Migrants in East and Southeast Asia. London: Ashgate. Winckler, Onn 2010 Labor Migration to the GCC States: Patterns, Scale, and Policies. In Migration and the Gulf. Washington, DC: Middle East Institute. Yeoh, Brenda S.A., Elspeth Graham and Paul J. Boyle 2002 Migrations and Family Relations in the Asia Pacific Region, Asian and Pacific Migration Journal, 11(1):1-11. Zachariah, K.C. E.T. Mathew and S. Irudaya Rajan 2001 Social, Economic and Demographic Consequences of Migration on Kerala, International Migration, 39(2):43-71.